Tag: sales

Netflix, Spotify, and Fortnite have all stopped / threatened to stop paying the so-called ‘Apple Tax’ of 15 to 30 percent on App Store revenues.” As sales of the company’s popular smartphone decelerate, Apple management has doubled down on its services unit — which includes the App Store, Apple Music subscriptions, Apple Pay and iCloud storage — as its next revenue generator. Any time a a user buys an iOS app, a digital item within an iOS app (e.g., an ebook) or initiates a subscription within a

Though Apple has trumpeted its services segment as a potential hedge against slowing iPhone sales, one of the top analysts believes the company is facing a growing revolt against the transaction fees it charges for apps.

“While the services segment grew 18 percent in the December quarter, we’ve now started to get investor questions worrying about whether the App Store will be the next shoe to drop,” AB Bernstein’s Toni Sacconaghi wrote in a note Friday. “Certainly, the headlines in the last few months haven’t been encouraging. Netflix, Spotify, and Fortnite have all stopped / threatened to stop paying the so-called ‘Apple Tax’ of 15 to 30 percent on App Store revenues.”

As sales of the company’s popular smartphone decelerate, Apple management has doubled down on its services unit — which includes the App Store, Apple Music subscriptions, Apple Pay and iCloud storage — as its next revenue generator.

As part of that regular Services revenue, Apple charges between 15 percent and 30 percent of monthly subscriptions for customers who buy software via the iOS App Store, a fee that’s come to be known as the “Apple Tax.” Any time a a user buys an iOS app, a digital item within an iOS app (e.g., an ebook) or initiates a subscription within an iOS app (e.g., a New York Times subscription), Apple takes a 30 percent cut for the first year and 15 percent for all subsequent years.

Such a “tax” poses a significant burden to companies like Netflix and Spotify, which have developed work-arounds to dodge the added fees.

“Unsurprisingly, this 30 percent cut has transformed the App Store into the largest single driver of Apple Services, accounting for about 40 percent of all Services growth in the last three years by our estimates,” added Sacconaghi, a five-star rated analyst on TipRanks, a analyst review service. “In recent years, however, discontent over this ‘Apple tax’ has been brewing among several major iOS app developers.”

Sacconaghi’s stock picks average a 23 percent one-year return, according to TipRanks.com, making him among the best tech analysts. The analyst has a market perform rating on Apple shares, which were up slightly before the opening bell on Friday.

Following music streaming provider Spotify, Netflix has also moved to stop new users from signing up via iOS, first within specific international markets and then globally. That move “is when investor concerns really came to a head,” Sacconaghi wrote, especially since Netflix was widely reported to be the single highest-grossing app within the App Store in 2018.

Apple stock is down more than 13 percent over the past 12 months and down more than 27 percent in the past three. Much of that decline has followed the company’s decision to no longer break out individual sales numbers for the iPhone, iPad and Mac, a statistic analysts and investors for years used as a proxy for Apple’s financial health.

Instead, CEO Tim Cook has placed his bets on the Services business, which reported revenues of $9.98 billion in the fourth quarter.

“When we look at our services business, we think about the fact that we have a very large and growing installed base,” CEO Tim Cook said on the company’s earnings call. “The installed base of all our major product categories is at an all-time high and has been growing over the last several quarters, so the opportunity for us to monetize our services business continues to grow over time.”

Still, Apple is unlikely to be hurt much by the loss of Netflix, which as the company’s single largest developer, represented “less than 0.3 percent of total services revenue” in 2018, according to Apple Chief Financial Officer Luca Maestri. What concerns Sacconaghi in the long term, though, is an ongoing lawsuit at the Supreme Court whether the “Apple Tax” meets the definition of a monopoly that has overcharged customers for apps.

While the current case before the high court does not actually address the issue of whether the App Store violates antitrust law (instead, the deliberation is just determining whether the plaintiffs even have the standing to sue in the first place), if the Supreme Court rules against Apple, it means that the actual case “has only just begun,” Sacconaghi wrote.

A measure of expected British house sales over the next three months was the weakest on record in December as Brexit approached, a survey of property valuers showed on Thursday. The Royal Institution of Chartered Surveyors (RICS) said the net balance of -28 among surveyors about the short-term outlook for housing sales was the weakest in the 20 years it has been asking the question. Britain’s housing market has slowed since the June 2016 Brexit referendum with house prices, as measured by mortga

A measure of expected British house sales over the next three months was the weakest on record in December as Brexit approached, a survey of property valuers showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said the net balance of -28 among surveyors about the short-term outlook for housing sales was the weakest in the 20 years it has been asking the question.

Britain’s housing market has slowed since the June 2016 Brexit referendum with house prices, as measured by mortgage lenders Halifax and Nationwide, growing at the slowest pace in around five years.

Electronics Arts has “a lot to prove” between slowing sales of the latest iteration of best-selling soccer franchise FIFA and a host of mixed-reviewed games like “Need for Speed,” according to one Wall Street brokerage.

“Non-sports games is precisely the area where EA has the most to prove,” O’Shea wrote. “Excluding sports games, EA has launched a string of misses. Mass Effect Andromeda got a 71 metacritic. Need for Speed got a 62 metacritic rating. And Star Wars Battlefront 2 saw a massive fan backlash.”

The company — and its investors — hasn’t had too much to worry about in recent years thanks to the success of FIFA Ultimate Team, the latest chapter of what’s become one of the most popular sports video game series in history. Ultimate Team, which allows gamers build up a dream team, is EA’s highest-margin business, generating sales through virtual goods, the analyst said.

Such purchases, though, have proven to be a heated topic among EA customers and across its games.

When EA introduced the in-game moneymaking strategy in “Star Wars Battlefront II,” hoards of angry gamers took to social media and Reddit to berate the decision, arguing that the game was structured as “pay to win.”

The uproar centered around loot boxes in the title’s in-game purchases system. Such boxes allowed players to save time by shelling out real money to accelerate the “unlock” of major characters such as Darth Vader. Due to the negative sentiment, the company was forced to turn off all in-game purchases a day before the title’s official Nov. 17 launch day.

“When EA brought loot boxes to Star Wars Battlefront 2, the fan backlash was swift and severe,” O’Shea added. “Battlefront 2 dramatically underperformed its original estimates, and bowing to pressure EA capitulated to gamers by removing loot boxes from the game. This was a first important sign that Ultimate Team growth would begin to stall.”

The analyst cut his price target on EA shares to $95 from $139, implying just 5 percent upside.

Walmart is adding more delivery companies to its roster to get groceries to shoppers’ homes. And the company says it’s still on track to have its online grocery delivery service available in more than 800 stores by the end of this fiscal year, then doubling that in 2019. Walmart continues to be a force to be reckoned with in the grocery industry, especially online. Online food and grocery sales in the U.S. are forecast by IGD to reach $59.5 billion in 2023, up from $23.9 billion last year. That

Walmart is adding more delivery companies to its roster to get groceries to shoppers’ homes.

The retailer said in a blog post Thursday it’s now working with Point Pickup, Skipcart, AxleHire and Roadie in cities across four states, to start, with a larger expansion to take place “in the coming weeks.” Walmart currently is working with DoorDash, Postmates and Deliv. And the company says it’s still on track to have its online grocery delivery service available in more than 800 stores by the end of this fiscal year, then doubling that in 2019.

Walmart continues to be a force to be reckoned with in the grocery industry, especially online.

Not only is the company experimenting with driverless cars to deliver bread and produce to shoppers’ doorsteps, but U.S. e-commerce chief Marc Lore recently said Walmart will find a way to one day put groceries right into customers’ refrigerators. It’s clearly not afraid to push the envelope. But it also has to compete with Amazon and its Whole Foods stores.

Online food and grocery sales in the U.S. are forecast by IGD to reach $59.5 billion in 2023, up from $23.9 billion last year. That would push e-commerce sales to account for 3.5 percent of the total market, compared with about 1.6 percent today.

Macy’s in particular — with more than 690 stores across the U.S., including Bloomingdale’s — has served as a sort of barometer for its peers. And though its food business isn’t on par with Walmart’s, it still serves as a traffic driver to Target stores. A company like J.C. Penney, on the other hand, is struggling to give shoppers a reason to go there when they could shop directly from a brand like Nike’s website. “The market’s growing impatience will be putting a brighter spotlight on struggling

“When you hear three weeks ago that this was the best consumer environment ever, you go: ‘Wait a minute. What changed overnight?'” said Stacey Widlitz, president of SW Retail Advisors.

Macy’s in particular — with more than 690 stores across the U.S., including Bloomingdale’s — has served as a sort of barometer for its peers. When the company said it didn’t sell as much women’s sportswear, sleepwear, fashion jewelry and cosmetics during the holidays as executives had hoped, Macy’s shares had their worst day ever, cratering nearly 18 percent. It brought many retail stocks down with it too.

Macy’s stock is now down 6 percent over the past 12 months, a much more modest decline than J.C. Penney, which has tumbled more than 65 percent over the same period, to hover right around $1.30. Nordstrom shares are down about 11 percent over that time period, while regional department store chain Dillard’s stock is down 8 percent over the past year.

Speaking at the National Retail Federation’s Big Show in New York this past week, Macy’s CEO Jeff Gennette made no mention of the retailer’s dismal performance this past holiday season. Instead, his panel session was focused on Macy’s bringing new tech and pop-up marketplaces to its stores. But some analysts have said these efforts aren’t really moving the needle.

“Now, as we are positioned in 2019, if Macy’s is leading with the downside, when is the shoe going to drop at Target, as good as they are?” Widlitz said. “Are they next?”

Target’s holiday sales were more upbeat than most, and the company says it’s still on track to make 2018 its best year for same-store sales growth since 2005. Unlike most of the department store operators, Target has found success in launching in-house brands for apparel and home goods that amass somewhat cultlike followings. And though its food business isn’t on par with Walmart’s, it still serves as a traffic driver to Target stores.

A company like J.C. Penney, on the other hand, is struggling to give shoppers a reason to go there when they could shop directly from a brand like Nike’s website. Its stores are outdated, unsold inventory is piling up and merchandising isn’t resonating with millennials, a key demographic that should be on all retailers’ radars. Some analysts are wondering if it could be the next major retailer to head down the same path of now bankrupt Bon-Ton and Sears. J.C. Penney’s stock hit a low of 92 cents on Dec. 27.

The nation’s craft beer taps are being squeezed by the government shutdown, which has put new releases on hold, prevented new breweries from opening and stopped shipments of some suds across state lines. The brewery can sell beer in Wisconsin, but sales in other states require federally approved labels. The shutdown that began Dec. 22 pinches primarily craft brewers, which offer wider varieties of beer and selections that change constantly. It’s too early to quantify the overall economic effect

The nation’s craft beer taps are being squeezed by the government shutdown, which has put new releases on hold, prevented new breweries from opening and stopped shipments of some suds across state lines.

The partial shutdown halted operations at the federal agency that regulates alcohol production and distribution. That means government employees can’t issue the permits needed for the beer to flow.

“I’ve been joking with people that if you’re going to want a new beer coming out pretty soon, you’re going to have to drink your brother-in-law’s home brew,” said Russ Klisch, founder and president of Lakefront Brewery in Milwaukee.

Brewers are increasingly nervous that they will lose money if brewery openings and seasonal beers are delayed much longer in the dispute over President Donald Trump’s demand for taxpayer funding of a wall along the border with Mexico.

At Lakefront, the release of a new beer has been postponed because the Alcohol and Tobacco Tax and Trade Bureau isn’t open to approve labels for the bottles and cans. The brewery can sell beer in Wisconsin, but sales in other states require federally approved labels.

The shutdown that began Dec. 22 pinches primarily craft brewers, which offer wider varieties of beer and selections that change constantly. The biggest brewers are largely unaffected because they already have government approval for their top national brands.

Lakefront offers about 30 styles of beer throughout the year, including 20 that are sold out of state. In a typical year, about six of those need label approval because they are new.

The end of the shutdown won’t bring an immediate end to the delays. The longer the shutdown continues, the bigger the backlog the bureau will have to sort through when work resumes. That means it could still be months before labels and permits are approved.

“A big part of it will be all the plans that brewers have for 2019 will get thrown out the window,” said Paul Gatza, director of the Brewers Association in Boulder, Colorado.

David Rowland’s plan to expand his brewery with a new location is also on hold.

“We really did expect to have our license by now or to be darned close,” said Rowland, co-owner of SoMe Brewing Co. in York, Maine.

The new brewery in York Beach is ready to open, he said. But first they need a federal permit. In the meantime, they still have to pay for rent, utilities and loans for the new location.

“We’re paying for a second brewery that is not open,” Rowland said.

Back in Wisconsin, Mosinee Brewing Co. finds itself in a similar position. The brewery expected to be making its own beer by now, but without a permit, it is limited to selling brews from other Wisconsin companies.

It’s too early to quantify the overall economic effect on breweries, said Mark GarthWaite, executive director of the Wisconsin Brewers Guild. But he said smaller brewers who are always introducing new beers — especially those that rely on sales to other states — are likely to suffer most.

Klisch said a beer or two might help the negotiations between Democratic lawmakers and Trump.

“I think if they all got a beer together and they drank one in a room, they would figure it out,” he said. Then, after a pause: “A few beers. I think they need a few beers, and they’ll figure out this shutdown.”

The downturn in mortgage interest rates that began in November finally has homebuilders feeling better. Builder sentiment rose 2 points to 58 in January on a monthly index from the National Association of Home Builders. This came after two months of sharp drops in sentiment to the lowest level in more than two years. “The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment,” said NAHB Chairman Randy Noel. The CEOs of KB Home and Lennar indicated that high prices

The downturn in mortgage interest rates that began in November finally has homebuilders feeling better.

Builder sentiment rose 2 points to 58 in January on a monthly index from the National Association of Home Builders. This came after two months of sharp drops in sentiment to the lowest level in more than two years. The index stood at 72 last January. Anything above 50 is considered positive.

Of the index’s three components, current sales conditions rose 2 points to 63. Sales expectations over the next six months increased 3 points to 64 and buyer traffic through new home models rose 1 point to 44. Buyer traffic is the only component in negative territory.

Some of the nation’s largest public homebuilders reported weak quarterly earnings last week, indicating a slowdown in sales. The CEOs of KB Home and Lennar indicated that high prices had sidelined buyers, especially as mortgage rates rose in the early fall. Now that rates are lower, builders could see renewed demand.

Builders, however, are not lowering prices significantly. There remains a tight supply of homes for sale at the entry level because builders are unable to profit as much on lower-priced homes.

“Builders need to continue to manage rising construction costs to keep home prices affordable, particularly for young buyers at the entry-level of the market,” said NAHB chief economist Robert Dietz. “Lower interest rates that peaked around 5 percent in mid-November and have since fallen to just below 4.5 percent will help the housing market continue to grow at a modest clip as we enter the new year.”

Regionally, on a three-month running average, sentiment in the Northeast fell 5 points to 45. Sentiment in the Midwest and South both fell 3 points to 52 and 62, respectively, The West saw a 1-point drop to 67.

Monthly housing starts and builder permits will not be released Thursday, due to the partial government shutdown. The NAHB estimates that the December government data would show that single-family starts ended the year totaling 876,000 units, a 3 percent gain over the 2017 total of 848,900. The association noted that the slowdown in sales during the fourth quarter has left new home inventories elevated in some markets.

Nordstrom said sales at its full-price stores were “below expectations” this holiday season and because of that the department store chain is having to use more promotions to get rid of excess inventory. It said off-price same-store sales were up 3.9 percent during that time-frame, on par with performance earlier in the year and in-line with expectations. Full-price same-store sales, however, were up just 0.3 percent, “reflecting softer traffic in stores,” Nordstrom said. It said online sales we

Nordstrom said sales at its full-price stores were “below expectations” this holiday season and because of that the department store chain is having to use more promotions to get rid of excess inventory.

The retailer said in a press release Tuesday evening that it now expects its diluted earnings per share for fiscal 2018 to fall on the low end of a prior range of $3.27 to $3.37.

Nordstrom shares were last down more than 3 percent in after-hours trading on the news.

The company said sales at its stores open for at least 12 months were up 1.3 percent overall for the nine weeks ended Jan. 5 compared with a year ago. It said off-price same-store sales were up 3.9 percent during that time-frame, on par with performance earlier in the year and in-line with expectations. Full-price same-store sales, however, were up just 0.3 percent, “reflecting softer traffic in stores,” Nordstrom said.

It said online sales were up 18 percent during the holiday period from a year ago and accounted for 36 percent of total sales.

The results from Nordstrom come just days after a handful of retailers including Macy’s and Kohl’s reported disappointing holiday sales. Macy’s CEO Jeff Gennette said traffic at stores fell after Black Friday and took longer than expected to pick back up. Macy’s stock suffered its worst day in history last Thursday, when it delivered that news to analysts and investors.

The dismal results have some analysts wondering just how bad department store operators have it today, as more spending moves online and foot traffic shifts away from stale shopping malls. The bankruptcies of chains like Bon-Ton, Toys R Us and Sears don’t appear to benefiting others in the industry.

“We see Bon-Ton’s filing [for bankruptcy] as a cautionary tale of what happens when department stores become too highly leveraged while falling too far behind the competitive pack,” Moody’s analyst Christina Boni said in a note to clients. “The market’s growing impatience will be putting a brighter spotlight on struggling companies like J.C. Penney during 2019.”

Nordstrom is set to report fourth-quarter and full-year earnings on Feb. 28.

From announcing all-electric cars to adding assembly lines specifically for plug-in models, auto executives are ramping up their electric vehicle plans. “Tesla has shown the industry that markets do exist for electric vehicles and the major players have taken notice.” Robinet says the early success of the Model 3 shows there is demand for all-electric vehicles. Until last year, U.S. sales of plug-in models were growing, but limited. In 2017, the auto web site Inside EV’s estimated the top sellin

“There’s no doubt, the auto industry is becoming much more serious about developing electric vehicles driven by the need for emissions compliance in He U.S., China and Europe.” said Michael Robinet, analyst with IHS Markit. “Tesla has shown the industry that markets do exist for electric vehicles and the major players have taken notice.”

Robinet says the early success of the Model 3 shows there is demand for all-electric vehicles. Until last year, U.S. sales of plug-in models were growing, but limited.

In 2017, the auto web site Inside EV’s estimated the top selling electric model in the U.S. was Tesla’s Model S, with sales of approximately 27,000 vehicles. In 2018, Inside EV’s estimates Tesla sold just under 140,000 Model 3’s in the U.S.. Tesla does not release sales by country.

The surge in sales for the Model 3 clearly demonstrates there’s a larger market for an all-electric vehicle, even if it comes at a higher price. The average Model 3 sells for roughly $50,000.

Businesses are waiting for economic data and holiday-quarter earnings to come out before they make decisions on how much and where to invest. It’s going to be “very hard for businesses to keep expanding,” she added, saying retailers are increasingly having a harder time finding labor. NRF chief economist Jack Kleinhenz said it normally takes 15 to 18 days then, after the shutdown has ended, to get retail sales data. The National Retail Federation had been predicting retail sales would be up at l

Businesses are waiting for economic data and holiday-quarter earnings to come out before they make decisions on how much and where to invest. They’re waiting to see if the economy is slipping into a recession. Waiting to see if global trade tensions rise or ease. And waiting to see if consumers pull back on discretionary spending should their tax refunds shrink. And while these companies wait, some are seemingly holding off on big investments.

There’s a 50 percent chance, at least, the U.S. heads into a recession in 2019, KPMG principal and chief economist Constance Hunter said during a panel with members of the media during the National Retail Federation’s Big Show in New York on Monday.

It’s going to be “very hard for businesses to keep expanding,” she added, saying retailers are increasingly having a harder time finding labor. And that’s just one of their challenges today.

Hunter’s comments echoed those of Janet Yellen, who said Monday morning at the Big Show that she has anecdotal evidence that businesses are starting to hold off on investment plans because of economic uncertainty. That could mean a retailer is waiting to upgrade its logistics, for example.

On the heels of Macy’s coming out with disappointing holiday sales last week ahead of its fourth-quarter earnings report, Hunter also said she expects this upcoming earnings season “will come in more surprising to the downside” than analysts have been predicting.

Nonetheless, it might take a while for analysts and companies alike to know exactly how the industry has been performing − for better or for worse − over the past few weeks, which includes the all-important holiday shopping season.

The government’s report on December retail sales was expected to come out on Wednesday and will now be delayed because of the federal government shutdown, which is now the longest in history.

NRF chief economist Jack Kleinhenz said it normally takes 15 to 18 days then, after the shutdown has ended, to get retail sales data. That’s going to delay organizations like NRF in making their own sales predictions. “Businesses are just waiting to see,” he said.

The National Retail Federation had been predicting retail sales would be up at least 4.5 percent in 2018, and between 4.3 and 4.8 percent during the holiday season.

Meanwhile, some retailers at NRF are still showing confidence in their ability to perform, even in the midst of so much uncertainty.

Target CEO Brian Cornell had said last year, ahead of the holiday season, that the consumer environment was the strongest he’d seen in his career. He didn’t move much from that messaging on Monday morning.

“I think we can all agree, 2018 was a really good year for retail,” Cornell said during a panel session at NRF’s Big Show. “Consumer confidence is still quite high. … The average consumer, they are looking at gas prices that have continued to decline.”